Optional Insurance

 

What is optional insurance? 

Optional insurance is workplace insurance coverage that can be purchased from the WSIB by people who are not automatically covered under the Workplace Safety and Insurance Act, 1997, (WSIA/Act). Optional insurance was previously called personal coverage. 

 

Who can apply for optional insurance? 

Four categories of people can apply to the WSIB for optional insurance: 

  • independent operators

  • sole proprietors

  • partners in a partnership

  • executive officers of a corporation   

As of January 1, 2013, people in these four categories who work in the construction industry are automatically covered under the Act. For more information about who is automatically covered by workplace insurance, see Who is Covered by the Act?

 

What happens if I buy optional insurance? 

If you buy optional insurance, you are then considered a worker under the Act and are entitled to benefits and services from the WSIB if you suffer a work-related injury or disease.  

Like other workers, you give up the right to sue.  You may want to consult your financial or legal adviser before purchasing optional insurance.  If you have questions about whether to purchase optional insurance, you can also contact the Office of the Employer Adviser at 1-800-387-0774 (toll free), (416) 327-0020 (Toronto) or visit their website 

 

How do I get optional insurance? 

To apply for optional insurance: 

  • Fill out an Optional Insurance Request/Change Form (1574A).  You can get this form on the WSIB website or you can phone WSIB toll-free at 1-800-387-0750 or (416) 344-1000 in Toronto.  This form must be signed by you or, if you are an executive officer, by an authorized officer of the company. If the form is not signed, the WSIB treats it as if there is no optional insurance in place and you would be denied benefits.  

  • Request the amount of insurance that best reflects your annual insurable earnings up to the maximum and submit proof of earnings (see below: “How Much Coverage Can You Get?”).  Benefits are based on the amount requested or your actual earnings, whichever is lower. 

  • Submit the completed form with proof of earnings to the WSIB.  The WSIB will verify the amount of coverage if and when you file a claim. 

 

How much coverage can I get? 

The WSIB determines the approved amount of insurance based upon your average earnings up to a maximum amount.  For 2013, the maximum annual insurable earnings ceiling is $83,200. 

If you have a business that has been operating for more than a year, the WSIB will calculate your annual average earnings based upon your most recent Canada Revenue Agency (CRA) income tax return or an audited financial statement of earnings.

Using the figures contained in your income tax return, the WSIB will calculate your average earnings by adding any of the following deductions to your net business income:  

  • pension plan and RRSP contributions

  • depreciation and amortization

  • charitable donations

  • expenses arising out of the use of your home or vehicle for business purposes

  • dividends from the business

  • other appropriate items.

If you have been in business for less than one year, the WSIB will set the approved amount of insurance at one-third of the maximum annual insurable earnings ceiling (which is $83,200 for 2013). 

In addition, a newly registered independent operator, sole proprietor or partner who has been in business for less than one year will be required to pay the equivalent of six months’ optional insurance premiums in advance, with any remainder of the annual insurance premiums to be paid by the next scheduled due date. 

If you are an executive officer of a corporation, average earnings are the earnings reported on the previous year’s Canada Revenue Agency income tax return.  If the employer has been in operation for less than one year, average earnings are the executive officer’s salary as stated by the employer.  These amounts are subject to the maximum annual earnings ceiling. 

 

How long does coverage last? 

Coverage lasts until either you or the WSIB cancel it in writing.  The WSIB may cancel coverage if you have an overdue balance on your account. Coverage will be cancelled on the 15th day after they send a registered letter notifying you of the cancellation. You must purchase coverage for a minimum of three months. 

 

What if my annual earnings change? 

You must inform the WSIB of any change in your annual earnings using the Optional Insurance Request/Change Form (1574A).  If your actual earnings are different from your reported earnings, the WSIB will pay benefits based on the lower of the two. 

 

Can I object to the amount of optional insurance allowed? 

Yes. If you disagree with the WSIB’s decision, you have six months to appeal. 

 

January 2013

IMPORTANT INFORMATION

This publication contains general information only. It is not legal advice about a particular situation and is not intended to replace advice from a qualified representative. This publication was last updated on the revision date listed above.